The announcement came after a meeting of dozens of leaders of the Palestine Liberation Organization and Abbas's Fatah movement.

However, a final decision is only expected at an Arab League summit in Libya next weekend.

The development delivers a new setback to U.S. efforts to salvage Israeli-Palestinian peace negotiations.

Israeli Prime Minister Binyamin Netanyahu, who is adamant about not extending a moratorium on settlement building, said in a statement earlier in the day that peace can only be achieved in negotiations and urged the Palestinians to continue talks.